Weekly Economic Update: July 20, 2020

The Markets (as of market close July 17, 2020)

Stocks surged early last Monday only to fall back by the end of the day. Earlier in the day, the S&P 500 reached its highest level since the COVID-19 pandemic sent equities reeling. The Nasdaq hit another record high in early trading. Unfortunately, stocks couldn’t hold their values as some states began to rein in reopening measures. European stocks climbed last Monday as did Treasury bond yields. Crude oil prices dipped ahead of an OPEC meeting that could result in plans to ease production cuts.
Equities rebounded last Tuesday as the Dow rose 2.1%, the S&P 500 climbed 1.3%, the Nasdaq advanced 0.9%, and the Russell 2000 gained 1.76%. Treasury yields slid 3.91% while crude oil prices jumped 0.85%. Market sectors advancing last Tuesday included energy, materials, industrials, and consumer staples.
Optimism about progress on a COVID-19 vaccine spurred investors last Wednesday. By the end of the day, the Russell 2000 jumped 3.5%, followed by the Global Dow, which advanced 1.3%. The S&P 500 gained 0.9%, the Dow increased 0.85%, and the Nasdaq rose 0.6%. Crude oil and Treasury yields grew while the dollar fell. Banks led financial stocks higher, and energy stocks also climbed.
A drop in technology shares pulled stocks lower last Thursday, ending a two-day rally. The Nasdaq fell 0.7% as Microsoft, Amazon, and Apple Inc. lost value. The Dow dropped 0.5%, the S&P 500 sank 0.3%, and the Russell 2000 fell 0.7%. Treasury yields declined 2.9%, and crude oil prices decreased 1.2%.
Stocks were mixed last Friday as the S&P 500 and the Nasdaq posted modest gains while the Dow fell for the second consecutive day. Within the S&P 500, the health-care sector soared to a record high. Other sectors advancing last Friday included utilities, real estate, and materials, while financials and energy lagged.
For the week, only the Nasdaq failed to post a gain while the other indexes advanced. The S&P 500 gained 1.25% and is less than 0.2 percentage point from its 2019 closing value. For the week, the Russell 2000 led the way, climbing 3.56%, followed by the Dow, which rose nearly 2.30%. The Nasdaq, despite losing a little more than 1.0%, is still more than 17.0% ahead of its 2019 ending mark. Treasury yields ended last week about where they started, while crude oil and gold each closed the week ahead.

Last Week’s Economic News

  • Consumer prices rose 0.6% in June. Over the last 12 months, consumer prices increased 0.6%.

  • Retail sales jumped 7.5% in June.

  • June saw the federal budget deficit move to $864.1 billion as June spending surpassed $1.1 trillion.

  • Import prices rose 1.4% in June after advancing 0.8% the previous month. Despite the last two monthly increases, import prices fell 3.8% for the 12 months ended in June.

  • According to the Federal Reserve, total industrial production rose 5.4% in June after increasing 1.4% in May.

  • New residential construction picked up steam in June.

Eye on the Week Ahead

The housing market is front and center this week with the latest reports on sales of both existing and new homes. Sales of existing homes are expected to rebound in June from May’s nearly 10% decline. On the other hand, new home sales soared in May and could retreat in June.

Have a nice week!





Robert G. Carpenter

President & CEO
Baltimore-Washington Financial Advisors